Speed\ Wealth Secrets Report #4 Mal Emery Mal Emery

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#4 - Increase Your Profitability via Lifetime Value of a Client

The whole concept of lifetime value of a customer is, generally speaking, not well enough understood and poorly utilized in the market place. Over the last five years I have undoubtedly spent hundreds of thousands of dollars on advertising. This might sound scary, but of course it is relevant to the results that it brings. But when I speak with the salesperson from a publication I have not previously advertised with, I am often amazed at how little they understand about lifetime value. Even when I say “lf I get the ad for a mutually acceptable price and your paper has placed it well and adhered to all my requests, I will get a good result, which means that I will continue to advertise with you over and over again - INDEFINITELY!”, the response I often get tells me the person on the other end of the phone has missed the point, isn’t listening or is not empowered with the right to use initiative at all. More importantly, it becomes clear that lifetime value of a customer is very low or nonexistent on the list of priorities of the publication itself. Arrogance, not so much of the sales person, but the general attitude of the hierarchy of the organization itself, can be difficult to overcome in these situations. No doubt in the past your have chosen to do business with someone, only to find the product and service unsatisfactory. Guess what... you Mal Emery

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never return and you tell 1-0 of your friends how terrible it was. This is exactly why I work with clients to create a system that will provide massive value to their clients and close the gap between what it costs to find a client and what it takes to keep them. It is absolutely vitally important that you learn to evaluate the lifetime value of a client and continue to implement the strategies that I will teach you to ensure that your competition will never figure out , because most of them haven’t recognized the lifetime value of their customers. Let’s Do The Math The lifetime value of a customer is directly proportional to the total profit that customer brings to your business over the entire lifetime of the relationship they have with your business. Let’s calculate a typical example to get really clear on this. Let’s assume you have a store where you’ve tracked the number of customers who come in the door. Every year, you get 1,000 new people, who between them purchase $20,000 worth of products - $2O per person. It is far more cost effective to give away a sample or free trial, than to spend cash on expensive promotions or ads. What I am saying here is, how much of the profit you are prepared to give away to attract a profit that you never had.

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Let’s take an example of a beauty salon. The average value of a sale when a client comes in is $50. lt costs $2O to service this sale, which means each sale brings a $30 average profit. On average a client return 8 times a year once they become a valued client and they are receiving great service. Which means each client is worth $240 per year in profit. Now if on average they stay with you for 3 years then they are worth $720 as a valued lifetime client. Looking at it this way would you be prepared to give away $50 of that profit to attract that client? This strategy is one that you can add a lot of creativity to...but remember it works because basically as humans we are a little bit lazy and we like to stay with the people and companies that we trust and because the law of reciprocation works alongside the valuable product or service we are providing. The better the service, the better the value the more repeat business you will receive and the more referrals you will get. Makes sense! After all, your biggest expenses are fixed overheads. Rent, wages and utilities are the real profit killers! So the additional cost of a free trial represents only a fraction what this potential new customer is worth to you. Once they have tried you once, your aim is to get them to come back a second time and to become a regular. A word of warning, if your product or service is not up to standard, this approach will send you broke very fast! Because if you want to get rich - you must deliver your value to a lot of people. Better still deliver MASSIVE VALUE to a lot of people. I can count on the fingers of both

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hands, the number of cafes, restaurants or other businesses I have stopped going to because the owner or manager does not understand the lifetime value of a customer. Sometimes I have been simply turned off my a general lack of interest, or rudeness and other times the product has been sub standard, and even though these establishments are close by, I would rather drive further to be treated well, by someone who understands I will keep coming back if I am satisfied with the first encounter. Of course I would hardly recommend my friends go somewhere that didn’t meet my own expectations, so there is further insidious damage to these businesses when potential customers are warned off before thev’ve even set foot in the door! Don’t let this happen to YOUR businessl Understanding this subject will change your language around it from “l have an advertising budget of $1,000” to “lt cost me $1S.6O to create a new client, who is going to be worth $872 to my business over the next three years!” lt all comes down to making an allocation of funds to a sale. All the Best, Mal Emery MalEmery.com Ps. Keep a look out in your email inbox for Speed Wealth Secrets Report #5

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